At this moment I am watching live on Bloomberg News the opening speech by President/Party General Secretary/Chairman of the Military Commission Xi Jinping of the once-every-five-years Chinese Communist Party Congress. This is far more important than what one finds on other TV networks whether pro-Trump right now (how great his tax plan/tromping on immigrants and football players are) or anti-Trump (what is the latest gossip from the Mueller investigation and will Republicans in the Senate stand up to Trump). A major theme seems to be a reassertion of party power and discipline, with a reinvigoration of the State-Owned Enterprises, with Communist Party cells to operate in nominally private enterprises, socialism with Chinese characteristics, with a reaffirmation of the foundation based on Marxism-Leninism. Yes, he used that term.
A couple of weeks ago, the House passed a Tax Reform Budget Resolution. Today, the Senate will take a vote on its Tax Reform Budget Resolution. Once passed, the differences will need to be resolved by both legislative bodies. President Trump met with the Senate Committee which included 6 Democratic Senators of which 5 are up for re-election in 2018. Trump impressed upon Senator Wyden the need for support of the Republican Tax Reform measure.
Except the call by President Trump did not get a favorable response. Senator Ron Wyden of Oregon called the President and the Republican’s bill a “con job” stating; there is a Grand Canyon-sized gap between the rhetoric surrounding this plan and reality.”
“All the happy talk about helping the middle class and avoiding a giveaway to the wealthy sounds great, but it is not what the White House and Republicans have on offer.”
Going forward, the content of both Resolutions will have to be reconciled and the differences between the House and the Senate’s Tax Reform Budget Resolution assumptions resolved. The House Resolution assumes the tax plan will generate economic growth and calls for $203 billion in miscellaneous spending cuts over a decade, while the Senate Resolution assumes no economic growth and creates a deficit of ~$1.5 trillion over a 10 year period. Most likely, greater importance will be placed on the Senate’s Resolution by Republicans due to their slim majority. Passing Tax Reform before 2018 elections has taken a priority for Republicans after doing so poorly with revising, repealing, and/or replacing the ACA. Little concern is given to its long term impact. In the end and the same as the 2001/2003 tax breaks, any deficits created after 10 years result in a sunset of the bill.
After the House and the Senate agree on a Budget Resolution, the House Ways and Means Committee will release a detailed tax bill and schedule a committee vote. The Tax Reform bill will go to the House and the Senate to be passed under Reconciliation rules (a majority) vote disallowing a filibuster effort by the Dems in the Senate. This will be the same as what occurred with the ACA although the Republican Senators who opposed the ACA legislation such as Collins and McCain will support Tax Reform.
More to come.